Chinese shoes hurting local industry

ADVERSE IMPACT Following a report that Chinese shoes posed unfair competition, the finance ministry has 70 days to decide whether to impose anti-dumping duties

By Jessie Ho / STAFF REPORTER

The Ministry of Economic Affairs yesterday affirmed that the influx of shoe imports from China has substantially damaged the local footwear industry, paving the way for the potential imposition of anti-dumping duties on Chinese imports.

"From studying the correlation between market competition and industry disruption, we found reasonable indications that shoes imported from China have hurt the local shoemaking industry," the International Trade Commission said in a statement released yesterday.

The case was filed by two local shoemaking associations and the Tainan Leather Commercial Association (台南皮革製品商業同業公會) last month.

Petition

In their petition the two associations demanded that the government impose provisional anti-dumping duties on six categories of shoes -- dress shoes, high-heeled shoes, boots, children's shoes, sandals and casual shoes -- that they claimed were being dumped in Taiwan.

An investigation into these claims showed that annual imports of China-made shoes have been rising since 2002, while sales of locally made shoes and those imported from other countries have been declining, according to the commission's statement.

The commission also said that importers of Chinese shoe products had undercut their local rivals and created unfair competition. From 2002 through the third quarter of this year, the import value of Chinese shoes were, on average, NT$351.3 (US$10.69) lower than the price of locally made shoes, the commission said.

And while the CIF, or cost, insurance and freight, for Chinese footwear rose 13.6 percent during the same period, the selling price of locally made shoes only increased 6.5 percent, implying that domestic shoemakers were not able to hike their prices given tight, low-priced competition from Chinese imports, the commission said.

As a result, shoes imported from China accounted for 53 percent of the local market in the first three quarters of the year, while Taiwan-made shoes saw their market share drop from 75.3 percent in 2001 to 37.4 percent at the end of the third quarter this year, the commission said.

Falling profits

Chinese footwear not only took over the low-end market, but also grabbed part of the high-end market. This resulted in falling orders, production cutbacks, layoffs and plunging sales and profits among Taiwanese shoemakers, the statement said, adding that some companies had opted to shut down or moved their business to other countries.

"Thus, the massive dumping of shoe products imported from China has obviously adversely affected the local industry," the statement read.

The Ministry of Economic Affairs said that it would forward the commission's preliminary findings to the Ministry of Finance, which would make a ruling on whether to levy anti-dumping duties within 70 days.

This is the second case of anti-dumping charges against Chinese imports. The first case involved towels manufactured in China. After a series of investigation, the finance ministry decided to impose a duty of 204.1 percent on Chinese towels for a period of five years.

The commission is also investigating a third anti-dumping case filed by the Taiwan Paper Industry Association (台灣區造紙工業同業公會) against imports of uncoated printing and writing paper from China, Japan and Indonesia.

In the first public hearing of the case held on Monday, local paper manufacturers asked the government to take action to prevent the dumping of uncoated paper from the three countries.